eBay Inc (EBAY) Board Structure An Impediment To Icahn’s Plans

Susquehanna Financial Group (SIG) analyst King She analyzes the eBay Inc (NASDAQ:EBAY) board structure and how it will be difficult for Carl Icahn to force a PayPal spinoff in 2014. She has an interesting analysis of the board structure and how it may pose an obstacle for Carl Icahn and his plans.

There are only 4 board seats up for election this year and the deadline to nominate for board seats was 1/18. Carl Icahn submitted his 2 names, but this means that he can only get 2 of 11 board seats in 2014. As such, a PayPal spin this year would require convincing the other board members to do a deal, which we view as unlikely.

At the same time, 2015 will be a different story, as eBay Inc (NASDAQ:EBAY) is in the middle of de-staggering its board, and all 11 board seats are up for re-election.

Corporate defense is strong in 2014 but will become weaker in 2015

eBay Inc (NASDAQ:EBAY) is in the middle of de-staggering its board

Last annual meeting was 4/18/13

In 2014, 4 out of 11 directors will be up for re-election

In 2015, all 11 directors will be up for re-election

Icahn is nominating 2 onto eBay Inc (NASDAQ:EBAY)’s board

So, even if Icahn is successful, he will only have 2 out of 11 seats on the board

Note that the window to nominate directors has passed (1/18/14)

Looks like Icahn beat the deadline, and eBay Inc (NASDAQ:EBAY) only disclosed it last night

Potential for Icahn to escalate in 2015 (all 11 directors up for re-election)

Special meeting callable by shareholders who own 25% net long position for at least 30 days

Director nomination not less than 90 days nor more than 120 days prior to the one year anniversary of the preceding year’s annual meeting

i.e. between 12/19/13 and 1/18/14

Provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder must be so delivered not earlier than 120 days prior to such annual meeting and not later than 90days prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made